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Additional Information

Market:	ASX / AIM
Sector:	General Mining
EPIC:	DML
Latest Price:	1.64 (0.92% )
52-week High:	1.66
52-week Low:	0.98
Market Cap:	722.37M

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Discovery Metals

Discovery Metals (ASX: DML) combines a portfolio of mineral assets in Africa and joint ventures in Australia. Discovery Metals is focused on developing the Boseto Copper Project in north west Botswana and to create shareholder wealth through discovery and development of economic mineral deposits.

The Company’s major asset and current focus is its Boseto Copper Project in north west Botswana. The company also controls the Dikoloti Nickel Project in north east Botswana. There are two smaller Australian projects which are joint ventured with the JV partners potentially earning into 51 percent equity.

Blackswan retains 'buy' stance on Discovery Metals after Boseto copper project exploration results

Monday, March 15, 2010

Blackswan Equities retailed in 'buy' recommendation for Discovery Metals (AIM: DME, ASX: DML) and target price of A$0.90 per share after the Botswana operating nickel and copper miner last week reported on the results from 26 exploration drill holes at the Boseto mine, which Blackswan said demonstrated “significant potential to add existing resources and extend Boseto’s mine life".

Discovery has recently completed a programme of wide-spaced step-out drilling along strike from the current resources and the results confirmed that mineralisation continues over the entire strike length drilled to date.

While leaving the target price unchanged, the broker increased its valuation of Discovery’s exploration to A$50 million based on a risk weighted evaluation of a second Boseto-sized hub following positive results form recent step-out drilling, which demonstrated significant potential for a resource increase. At the same time, Blackswan said the exploration success was needed to justify the company’s rising value as the exploration upside offered by its landholding in Botswana remained underrated by investors.

The report stated that the landholding in Botswana could support more Boseto-sized operations as the company has just “scratched the surface” of the 1,300 km (kilometre) long prospective strike length along the Kalahari copper belt.

Drilling has shown that the Plutus-Petra mineralisation extends 15 km (kilometres) to the northeast beyond the current 11 km (kilometre) strike length of the existing resource and remained open along strike with the most north-east drill hole intersecting an interval of 4 metres at 2.2% copper.

The results also had little impact on the broker’s earnings estimates, which forecast Discovery to generate a free cash flow in excess of A$70 million per year once Boseto has ramped up to 25 ktpa (kilotonnes per annum) of copper concentrate in 2012.

Blackswan put the net present value of Discovery at A$296.4 million, while projecting revenues of A$0.4 million, A$19.5 million and A$221.2 million in 2010, 2011 and 2012 respectively and earnings before interest and tax (EBIT) of A$4.4 million and A$120.2 million in 2011 and 2012 respectively following losses of A$5 million and A$3.7 million in 2009 and 2010.

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